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CA Intermediate · Advanced Accounting · AS 18 Related Party Disclosures

Nandi Steels Ltd is a wholly owned subsidiary of Himalaya Holdings Ltd. During 2025-26 it received a loan of ₹50 lakh from Himalaya Holdings at 9% interest. The Government of India holds 100% of Himalaya Holdings. Which statement is correct under AS 18 for Nandi Steels' financial statements?

Nandi Steels must disclose the loan and the interest as transactions with its holding company, Himalaya Holdings. Group relationships do not exempt disclosure, and the parent-subsidiary relationship itself must also be disclosed.

  1. AThe loan and interest must be disclosed as transactions with the holding company, a related partyCorrect
  2. BDisclosure is exempt because the loan is within the group
  3. CDisclosure is exempt because the ultimate owner is the Government
  4. DOnly the interest is disclosed, not the loan

Explanation

A holding company is a related party of its subsidiary, and both the loan and interest are transactions needing disclosure. AS 18 exempts state-controlled enterprises from disclosing transactions with other state-controlled enterprises, but the entity here is not simply a state-controlled enterprise in the exemption; the exemption relates to transactions with the state and other state-controlled enterprises, and the disclosure of control relationship still applies. The conservative ICAI-taught answer is disclosure.

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